A modified coherent state is created by mixing a coherent state with optical field from parametric down-conversion in a beam splitter. A two-photon interference effect will cancel the two-photon state. This modified coherent state has ad-vantage over the conventional weak coherent state currently used widely in quantum cryptography. We make numerical analysis on the improvement in secure data rate and transmission distance with the modified coherent state. With a three-photon interference effect to cancel the three-photon state, further improvement is shown to be possible in a newly proposed protocol for quantum cryptography.